The domestic gold price on February 18 shot up over VND37 million per tael as the global price rose to US$1,385.4 per ounce.
Since early this month, gold prices have soared nearly VND2 million per tael (a tael is equivalent to 37.5 grams).
Tran Trong Quoc Khanh, director of the Gold Center of Asia Commercial Bank, blamed the increasing demand for gold for reason in price hike.
He said Vietnam has an average demand of 60 tons of gold annually and local firms have only been able to produce one to two tons per year.
The amount of gold the State Bank of Vietnam allowed to be imported in early 2011 was not sufficient because the bank wanted to manipulate the gold market.
On the same day, the US dollar exchange rate continued to depreciate by VND10 per dollar to VND20,673, causing a drop of VND5 per dollar to VND20,785 in commercial banks.
The rate in commercial banks was VND25 per dollar lower than three days ago.
Meanwhile, the rate in the free market continued to push up to VND22,050 per dollar for buying and VND22,300 for selling, in the afternoon of February 18, a hike of VND300 from the previous day.
In order to correct the currency market with only one exchange rate, the Central Bank has drafted administrative penalties for violation in currency trade.
Accordingly, illegal gold traders will be fined VND500 million, those who don’t trade foreign currencies as per regulated rates will be fined VND75 million and those who quote prices, sign contracts or conduct business transactions in foreign currencies will be fined VND45 million.